The recovery from pandemic-fueled recession is happening, but it’s uneven and could be derailed easily if coronavirus cases continue to surge and Congress fails to pass another relief package, according to experts speaking Wednesday at a webinar providing an economic outlook for Wisconsin and the New North.
The webinar hosted by the Donald J. Schneider School of Business & Economics at St. Norbert College featured representatives from the college and the Wisconsin Department of Revenue.
“It’s definitely been a fractured recovery, with people on the lower end of the economic spectrum, unfortunately, being hit harder,” said Marc Schaffer, director of St. Norbert’s Center for Business & Economic Analysis.
According to 2020 data gathered so far, March and April were the worst months for the economy as many businesses closed down or drastically reduced hours to comply with the state’s Safer at Home order. Unemployment soared and spending — especially at restaurants, hotels and entertainment venues — plummeted.
“Looking back, we can see how significant the decline was … the economy was down 30-plus percent, but we have been able to bring those numbers up again,” said Peter Barca, secretary of Wisconsin’s Department of Revenue. “Right now, we predict to see real GDP recovery in early 2022 and a complete employment recovery by the end of 2022.”
John Koskinen, chief economist with the Department of Revenue, said sales of durable goods, such as appliances, vehicles and construction materials for homes, have increased, but the service industry has still not recovered, with the entertainment and hospitality sectors well below pre-pandemic levels.
“Even within an industry, you can see the unevenness of the recovery. Take construction — home construction is doing very well while commercial construction still has a way to go,” he said.
While the economic picture may brighten in 2021, those efforts could be derailed if Congress fails to pass an economic stimulus package or the number of coronavirus cases continue to soar, Barca said.
Schaffer said the pandemic has changed people’s behavior, with more people staying at home and skipping going out to eat. In addition, entertainment options, from sporting events to going to the movies, are few.
“I don’t think we’ll see some of the spending coming back in some areas until people feel comfortable going out again like we used to, whether it’s from a decline in cases or the vaccine,” he said.
Here are some other data points from the webinar:
- Fewer people, especially women with children, are participating in the workforce. Many women either quit their jobs or cut back on their hours to tend to their children who are participating in virtual schooling. With those moms out of the workforce, discretionary spending decreases.
- Virtual education has led to job losses in the education sector as bus drivers, lunch servers, cleaners and other non-professional staff are not needed since students are not in the school building. In higher education, the number of new students next year may still be below average, with 20 percent fewer students applying for financial aid through FAFSA. Many colleges and universities already face a tough financial situation.
- Tax revenue collection shows some businesses had strong summers, especially with the option for people to eat outside, but as the weather cooled and the number of virus cases increased in September and into October, revenue collection is once again on the decline.
- Online shopping is up nearly 100 percent over where it was a year ago, according to sales tax revenue.
The event also coincided with the launch of a Business Intel Tracker from New North, Inc., which will provide dashboards of data as well as insights and trends. The tracker can be found at newnorthinteltracker.com.